Developers 'flipping' projects for huge profits

Clay Lucas and Aisha Dow

Developer Equiset has gone back to Planning Minister Matthew Guy to build even higher on a Collins Street site that tripled in value after the minister approved a skyscraper on it early this year.

It is the latest example of a developer trying to "flip" a project – on-sell it for huge profits after gaining planning approval from Mr Guy, who is responsible for signing off on large projects in Melbourne's CBD.

Flipping has long been a part of Melbourne's property industry, but the surge in skyscraper approvals in recent years has dramatically multiplied the worth of development sites in the CBD if they can be sold with an approved permit.

Equiset bought 464 Collins Street last May for $10.5 million, and immediately began plans for a 55-level apartment tower on the tiny site, known as Makers Mark because of an existing building.

Mr Guy approved the project in February, and it went on the market for around $30 million. The project is now, according to agents CBRE, under contract for sale.

Equiset – which says the building is not yet sold – now wants Mr Guy to sign off on another six levels so that the project's apartments can be made bigger.

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Other similar projects, approved by the minister but never built, include 64 A'Beckett Street, bought in 2009 for $11 million and flipped for almost $27 million to Singaporean firm Aspial after MrGuy granted approval for 48 levels on the site.

Aspial, also behind the controversial Australia 108 skyscraper in Southbank, now wants Mr Guy to approve another 33 levels to make the tower over 80 levels.

Another property, 555 Collins Street, was bought by developer Harry Stamoulis in 2003 for $38million.

It sold for a reported $78 million in May to another Singaporean firm, Fragrance, after planning laws applying to the building were altered to allow more height.

Mr Guy's spokeswoman did not reply to questioning over whether the minister had concerns over projects he approved being on-sold without being built.

Opposition planning spokesman Brian Tee said Melbourne's "prized liveability" was being forsaken so developers could turn a profit. "The look and feel of the city is being traded off for developer profits," Mr Tee said.

Melbourne City Council planning chair Ken Ong said he noticed development sites being flipped "a few times a year".

"If an applicant is a known developer we figure they'll build it," Cr Ong said.

But he said unknown applicants were proving less likely to develop sites.

"If the applicant is someone we haven't seen before there's a likelihood they'll get the permit and flip it," he said.

Cr Ong said developers would often apply for a permit with a genuine intent to build the property, but end up selling after being approached with a good offer.

He said one idea to prevent the flipping of properties was to put a limit on the number of times landholders could apply for an extension of a development permit.

He said the council had recently turned down an application to extend a building permit for the seventh time.